Making a move: How to determine the right location for your business

Finding a new location for your business isn’t as simple as picking out a nice building and moving in. There are many factors that go into the decision, and working with a professional can help ensure that you take advantage of all that a location has to offer, says Rick Hughes, executive director, Cushman & Wakefield of Texas Inc., who recently worked with Allen Economic Development Corp. to locate one of his clients to Allen, Texas.

“A commercial real estate professional is very valuable in locating the right place to operate your business,” says Hughes. “The demographics of an area, where employees are located, logistics, right to work issues, workers’ compensation obligations, unemployment insurance costs and other issues all come into play. It is significantly more complicated than saying, ‘This city looks like a nice place to run a business.’”

Smart Business spoke with Hughes about how to find the right location for your business, and why Allen may be a great choice.

What are the benefits of being located in Allen?

In the Dallas area, professional and college-educated populations are generally north of downtown, with cities that have good school systems and that are very attractive places to be and to raise a family. Good schools, good fire and police support, and cost effective living are some of the attributes that make Allen attractive.

The city also has a number of corporate headquarters, which businesses can potentially use to their advantage.

What should a business owner look at when trying to determine a new location?

One important thing is the availability of certain kinds of labor. What is the profile of labor? What kinds of businesses do well in that area? Where are those people working? Where do they live? Look at the demographics and determine whether the available labor pool will meet your needs.

What else should a business consider?

If you are a manufacturer, for example, and are making something that needs to be distributed efficiently, you don’t want to be in a congested area. But you do want to be close to the Interstate highway system, so there are logistics to consider.

Also look at where ‘the Boss’ lives. A company will always say that is not a factor, but invariably, the chosen location is closer to his or her home than to those of other employees, so consider where the management team lives or wants to live.

The quality of schools is also a factor. A business wants its employees to live close to work, and schools are a part of that. If an employee has to leave work to go to the school, you don’t want them to have to drive an hour each way.

Some businesses are also sensitive to the company’s address. They want a corporate address, and they want it to be in a particular city. But for the most part, the labor profile, the location of the management team and what kind of building the company wants to be in are key.

How can an outside adviser help a business make the right choice and take advantage of available incentives?

The adviser can act as an insulator in negotiations. If a company is acting on its own and meets with a city, and the city offers it $500,000 to move there, that may sound like a good offer. But if you have that go-between, he or she can bring the offer back and the company doesn’t have to respond on the spot.

An experienced adviser can also tell you how each potential city is going to respond to each opportunity. That person knows which cities are looking for high-paying jobs, and which are not as interested in the quality of jobs as they are the number of jobs. Some are more interested in the capital and infrastructure commitment a company is going to make. For example, the city of Allen in very keen on having corporate headquarters move to the city, and an adviser will know that and can help you leverage that.

How can an economic development corporation assist a company in determining where to move?

A company and its adviser can send out a profile. “Here is the capital investment that we are prepared to spend if we move to your city. Here are the number of employees and jobs that we are going to bring to your city. Here are the wages and benefits of these jobs, aggregated.” Then ask what the economic development corporation can do to help mitigate your costs. For example, it might say, ‘If you move here, we will offer property tax abatement on your real and personal property, or we will give you a grant of $500,000, paid out over two years, if you commit to move.’

After you’ve looked at the proposals, then look at available real estate to see if there is a building in that city that works for this company. Look at the incentives and determine if they help mitigate the costs of moving. Look at the demographics to see if it is a place where not only do your employees live, or would want to live, but at whether the profile demographic contains the kinds of people you will want to hire.

What is the state of incentives, given today’s economy?

In some instances, states are taking economic incentive funds and moving them into budgetary items. Other states, such as Texas, understand that, long term, in these economic times, when there is huge budgetary pressure at the state level, that states need jobs more than ever. They are investing in jobs, as opposed to taking money away from attracting and recruiting jobs, and adding money to economic development. Those are the states that businesses are going to want be in because they are investing in the future.

States that aren’t doing so are being very short-sighted by reducing the funds they have in their tool chest to attract businesses.

Rick Hughes is executive director at Cushman & Wakefield of Texas Inc. Reach him at (972) 663-9601 or [email protected]